Gold prices held steady on Tuesday as investors braced for likely hot U.S. inflation data that would consolidate bets of aggressive measures from the Federal Reserve to tame pricing pressures.
Spot gold ticked 0.1% higher to $1,955.61 per ounce by 1153 GMT, after hitting its highest in nearly a month on Monday. U.S. gold futures rose 0.4% to $1,956.60.
“A higher-than-expected headline U.S. CPI print may nudge spot gold closer to the psychologically important $2,000 level, considering bullion’s time-honoured role as an inflation hedge,” said Han Tan, chief market analyst at Exinity.
Data due later in the day is likely to show U.S. consumer prices rose by the most in 16-1/2 years in March, which would seal the case for the Fed to raise interest rates by a hefty 50 basis points next month.
Palladium jumps 5% on supply fears, inflation risks lift gold
Pressuring gold slightly, the dollar held firm, supported by high U.S. yields.
A stronger dollar makes gold more expensive for holders of other currencies, while higher U.S. interest rates and yields increase the opportunity cost of holding zero-yield bullion.
“They (the Fed) can print dollars, but they can’t print commodities and economic growth in quite the way that they would like,” independent analyst Ross Norman said.
“The chance of a significant policy error in not responding quicker (to inflation) looks ever greater and that will feed into gold.”
Auto-catalyst metal palladium fell 2.9% to $2,361.37 per ounce, after hitting its highest since March 24 at $2,550.58 on Monday following the suspension of trading of the metal sourced from Russia in the London hub.
Given the supply concerns, the drop in palladium was “something of an anomaly,” Norman said.
Spot silver dropped 0.5% to $24.96 per ounce and platinum slipped 1.3% to $964.45.
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